Buy-now-pay-later (BNPL) fintechs have built their brands over the last several years selling the convenience of “budgeting” your expenses.
You can have your cake now, eat it too, then pay it off over 4 interest-free payments.
But there’s been growing concerns about the sector, with nearly two-thirds of Australian financial counsellors supporting clients struggling with BNPL debts according to a report released late last year calling for increased safeguards on what many see as lending that exploits a legislative loophole to avoid existing credit checks.
A 2020 ASIC report found that 20% of BNPL users cut back or went without essential items, such as food, because they were overcommitted on BNPL repayments.
One of the biggest players in the space is the Swedish payments fintech Klarna.
Klarna launched in Australia in January 2020 and has more than 100,000 users. Its backers include the Commonwealth Bank, which invested US$300 million in the BNPL and jointly funds and has 50:50 ownership rights to Klarna’s Australian and New Zealand busines.
A year ago Klarna raised $1.3 billion for a $40 billion valuation, with CBA chipping in once again, to become the world’s second most valuable privately owned fintech.
Its BNPL function is available through the CBA’s app for online shopping, as well as being offered to non-CBA consumers via the Klarna app.
And today the BNPL introduced one of the most incredible innovations seen in the payments space in decades to complement its “Pay in 4” option.
Klarna’s new “Pay Now” feature has launched in Australia. It allows you to pay for what you’re buying immediately and in full.
We can’t wait to see Klarna Kash, which lets people withdraw their own money and pay for something with cash.